The final quarter on the year is traditionally the busiest time for the shipping industry, as Halloween, Bonfire Night and Christmas ramp up demand for consumer goods and industry supplies. Retailers also build up extra stock during the final quarter in preparation for the January sales.
The past two years have been difficult due to the disruption caused by the pandemic, and now added to this are the skyrocketing fuel costs, shipping container shortages, and strike action at UK ports. The supply chain blockages which built up during the Covid crisis are still only partially resolved, making for a very challenging season for freight forwarders.
As Raconteur reports, about 90% of all international trade is shipped by sea. Therefore, a problem at any stage in the logistics process has a widespread impact on transporters, warehouses, businesses, retailers, and the consumer.
Enda Breslin, general manager for EMEA, told the publication: “As we saw during the last supply chain crisis, one stone dropping into the ocean can have huge ripple effects. The strikes will inevitably lead to cargo ships being unable to unload and this could have ramifications as we rapidly approach peak season.”
Workers at Felixstowe port, which handles around half of all goods imported to the UK, are engaged in an increasingly bitter pay dispute with their employers. There was already an 8-day long strike in August, with further action planned for September and November, which is timed to coordinate with a two-week strike at the port of Liverpool.
Unions are demanding a 10% pay increase in line with the rise in the cost of living, while the ports are saying that the negotiation process has been exhausted. The East Anglian Times reports that the latest round of strike action will have much more impact than the first, because of proximity to the festive season.
Samir Dani, professor of operations management at Keele University, said: "There are a number of things to be worried about," Supply chains will be under pressure and, with the clash at Liverpool, trade could be seriously affected. If ships have to be diverted, we could also see prices go up."
Professor Dani added: "The last strikes didn't have a huge impact. Some shippers diverted their traffic elsewhere, but the industry wasn't near its peak at that point. However, there is more concern around this second round because of Christmas. Now is the time a lot of people will start buying so pressure on supply chains will be worrying some businesses."
"We have not had strikes like this for a long time. If this uncertainty continues, companies may choose to avoid Felixstowe altogether. Of course, some European and American ports have also faced industrial action so this isn't unique to us. But if it continues and it happens another two or three times, shippers may start questioning the site's reliability.”
Business leaders have called for the government to step in to help resolve the strikes, and to provide further support, such as capping the cost of shipping containers.
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